Wood Mackenzie：Utility-scale Photovoltaic Generation Is Asia-Pacific’s Cheapest Source of Electricity

Wood Mackenzie：Utility-scale photovoltaic generation is Asia-Pacific’s cheapest source of electricity

In 2023, the levelized cost of energy (LCOE) in the Asia-Pacific region dropped sharply to an all-time low. According to new analysis from Wood Mackenzie, renewable energy will be 13% cheaper than traditional coal in 2023 and is expected to be 32% cheaper by 2030.

Alex Whitworth, vice president and head of Asia Pacific power research at Wood Mackenzie, said: “Utility-scale photovoltaic has become the cheapest source of electricity in the region by 2023, while onshore wind is expected to become cheaper than coal after 2025. "

In 2023, large-scale photovoltaic projects in 11 of the 15 countries in the Asia-Pacific region will become the country's cheapest source of electricity. WoodMac said PV costs "will fall significantly by 23% in 2023, marking the end of two years of supply chain disruption and inflation."

Wood Mackenzie predicts that the cost of new photovoltaic projects will fall by another 20% by 2030, driven by falling component prices and overproduction in China.

At the same time, distributed photovoltaic costs fell by 26% in 2023, with the technology’s average price being 12% lower than residential electricity prices. Wood Mackenzie said this creates huge potential for more rooftop photovoltaic applications.

Sooraj Narayan, senior research analyst for power and renewables in Asia Pacific at Wood Mackenzie, said: “This trend makes distributed PV increasingly attractive to end users in many markets across Asia Pacific, with costs already lower than rising residential electricity prices in China and Australia. 30% lower.”

Overall, China leads the way in reducing renewable energy costs, with utility-scale photovoltaic, onshore and offshore wind costs falling by 40% to 70% compared with other markets in Asia Pacific.

While falling costs have supported renewable energy investment, investors remain concerned about profitability, grid integration, backup and energy storage.

"Government policy will play a key role in supporting improvements in grid reliability, transmission capacity and promoting battery storage to manage the intermittency of renewable energy," Whitworth said.

In December last year, accounting firm Ernst & Young said in a report that the current weighted average LCOE of global photovoltaics is 29% lower than the cheapest fossil fuel alternatives.

Earlier this year, Wood Mackenzie predicted that global photovoltaic growth would remain stable and strong through 2032. It is estimated that about 350GW of photovoltaics will be installed globally every year in the next eight years. (This article is compiled from pv-magazine, please indicate the source when reprinting)